Angry Chinese authorities have seized up to 1 trillion yuan ($157 billion) from local governments who failed to spend their budget allocations, sources said, as Beijing seeks ways to stimulate economic growth which is at its slowest for 25 years.
The huge underspend, linked to officials' reluctance to splash out on big-ticket projects while authorities crack down on corruption, supports the argument of some economists that Chinese state investment has grown too slowly this year.
"In the past, local governments had asked for the money. Money was given, but no one acted," said one of two sources, both of whom are close to the government.
They declined to be named as they are not authorised to speak to the media.
"Investments were not realised, and the money will be reallocated," added the source, an economist. He did not elaborate on how the funds would be spent.
The repossessed money will pay for other investments, said the sources, as economic growth looks increasingly likely to fall below 7 percent.
Lacklustre spending growth could be especially costly for China, as higher investment is seen by many as the best way to shore up activity, at least in the short-term, even if it does put deeper reforms on the back burner for now.
One trillion yuan of unspent funds is equivalent to about 6 percent of China's projected total government spending for 2015.
The Finance Ministry was not immediately available for comment when contacted by Reuters.
FISCAL SPENDING BOOST
China's economy has had a difficult year. Unsteady global demand and a wobbly Chinese housing market are expected to drag full-year growth to 7 percent in 2015, though many analysts suspect the true figure to be much lower.
Copyright: Reuters